Why College?

We hear it from all sides. You have to get a college education if you want to have a good life. The message is meant to be positive, but without specific information we are left with a lot of questions: What exactly is this good life? If we take on the time, effort and expense of college what can we expect from this investment? We may have heard that with a college education one can expect higher earnings, but how much earning advantage can we get from the experience? Are there other benefits in addition to earnings?

Local Context

A college degree does not guarantee you a job, high pay or any other economic benefit. However, when you compare those with a high school diploma and those with a college degree in the Greater Louisville area, the differences are striking and clearly show the advantages you gain from furthering your education.

Income in Louisville

In 2010, adults 25 and older with a high school or equivalent education made an average of $24,743 over the previous 12 months. That figure for those with a bachelor’s degree earned $42,313 in the same period. This means that adults with a bachelor’s degree earned on the average 71% more than their counterparts with a high school diploma.

Employment in Louisville

The same advantages for college educated adults versus their high school diploma counterparts can be seen in the figures for unemployment. For working-age individuals (25-64 years old) who obtained at least a bachelor’s degree in the Louisville area, the unemployment rate was 3.7% in 2010. For those with high school diplomas only, the unemployment rate soared to 14.1%. In other words, for every 10 working age adults with a bachelor’s degree, there were 39 unemployed individuals with high school diplomas.

Earnings

Regardless of the difficulties in getting the job you want or finding suitable placement in the economy of the day, completing your education is the best way to increase your chances to make a good living. Below are a few realities that underscore the advantages for those who have college credentials versus those who do not.

The median after-tax earnings for high school graduates in 2009 was $26,700. For college graduates the median was $42,700.

Lifetime Earnings

Lifetime earning advantages are also impressive when you compare high school and college graduates. Those with a college degree earn 66% more than high school graduates over their work-life years (25 – 64).

But does the cost of college reduce these earning advantages? Again, the answer clearly points to the benefits of higher education. Compared to a high school graduate, the typical four-year college graduate who enrolled at age 18 has earned enough by age 33 to compensate for being out of the labor force for four years, and for borrowing the full amount required to pay tuition and fees without any grant assistance. In other words, the added earnings that come from a bachelor’s degree mean that by age 33 a person normally has paid off all loans and is likely to generate more earnings over the remainder of her or his career.

Sources: U.S. Census Bureau, 2009; The College Board, 2009; calculations by authors of Education Pays.

Employment

For young adults between the ages of 20 and 24, the unemployment rate in the fourth quarter of 2009 for high school graduates was 2.6 times as high as that for college graduates.
Across the years those with college degrees have had substantially lower unemployment rates compared to high school graduates. In 2009, for example, the unemployment rate for those with a four-year college degree was 4.6%, for a total of 5.1 percentage points lower than the 9.7% unemployment rate for high school graduates.

Source: Bureau of Labor Statistics, 2010d.

A college degree also improves your chances for holding on to a stable career that optimizes your ability to earn. In 2008 44% of high school graduates worked full-time year-round. The figure was 60% for college graduates.

Job Satisfaction

The more education you have the more likely you are to be highly satisfied with your work. Recent studies show that about 58% of those with some college or an associate degree reported being very satisfied with their jobs, while 50% of high school graduates and 40% of those without a high school diploma reported being very satisfied.

Sources: National Opinion Research Center, 2008; calculations by authors of Education Pays.

Education also impacts your sense of accomplishment in your work. Fifty-nine percent of college graduates report that they feel their work is important and get a sense of accomplishment from their jobs compared to 36% with a high school diploma reporting the same sense of importance and accomplishment.

Other Economic Benefits

College-educated workers are more likely than others to be offered pension plans by their employers. Among full-time year-round workers ages 25 and older, 70% of four-year college graduates were offered pension plans by their employers in 2008. Employer-provided pension plans were available to 65% of associate degree recipients, 61% of workers with some college but no degree, 55% of high school graduates, and only 30% of those who did not complete high school.

In 2008, 68% of four-year college graduates working at least half-time in the private sector were covered by employer-provided health insurance. Only 50% of high school graduates had this benefit.

Health Benefits

Smoking rates among college graduates have been significantly lower than smoking rates among other adults since information about the risks became public. In 2008, only 9% of college graduates were smokers, compared with 27% of high school graduates who still smoked.

College graduates are also more active. Among young adults between the ages of 25 and 34, 63% of four-year college graduates reported exercising vigorously at least once a week. Among high school graduates in this age range, 37% reported vigorous exercise.

Obesity rates are substantially reduced among those with more education. Among 25-34 year-olds with a bachelor’s degree, 20% were obese. For high school graduates, 34% were obese. These same trends extend to children. Obesity rates among children aged 12 – 19 living in households with a parent or guardian with a bachelor’s degree or higher was 10% in recent years compared to an obesity rate of 22% for the same age group in households with the highest education being a high school diploma.

Low-birth-weight babies tend to have high medical costs throughout their lives. Overall, mothers with only a high school education are 31% more likely than mothers with a bachelor’s degree or higher (8.9% vs. 6.8%) to give birth to babies weighing less than 5.5 pounds.

Parents and Children

Children of parents with higher levels of educational attainment are better prepared for school and, while in school, are more likely than other children to engage in educational activities with their parents. Recent research shows that children between the ages of 3 and 5 whose parents had bachelor’s degrees were more than twice as likely as children of high school graduates to recognize all of the letters of the alphabet (39% vs. 18%).

Among parents whose highest degree was a bachelor’s degree, 68% read to their children daily in 2007. This compares to 41% of parents with a high school graduates, and 26% of parents who did not complete high school.

Sources: National Center for Education Statistics, 2007; calculations by authors of Education Pays.

Parents with higher levels of education more frequently participate with their school-age children in a wide variety of activities, including visits to libraries, going to plays or other live shows, visits to art galleries, museums or historical sites and attendance at events sponsored by community, religious or ethnic groups.

Source: National Center for Education Statistics, 2009, Table 24.

Community Involvement

Both the percentage of people who donate their time to organizations and the number of hours people spend in volunteer activities are higher among individuals with higher levels of education. In a one year period from September 1, 2008 through September 1, 2009, 43% of adults with at least a bachelor’s degree volunteered for a median of 54 hours. Among high school graduates, 19% volunteered for a median of 48 hours during this same time period.

In every age group, adults with higher levels of education are more likely to vote than those with lower levels of education. For example, among those aged 25 – 44, 77% with a bachelor’s degree or higher voted in the 2008 presidential election. This figure was 45% for high school graduates in the same age group.